U.S. League should tie the knot with rival group, consultant says.

WASHINGTON -- A management consultant has urged the U.S. League of Savings Institutions to merge with its thrift-industry rival, the National Council of Community Bankers.

The study also said the league should consider linking with the Independent Bankers Association of America, a commercial bank group.

Mergers Deemed Crucial

The recommendations came in a confidential report for the U.S. League by BDO Seidman of New York. The 97-page planning document was prepared in August, and a copy was obtained last week by the American Banker.

The study points out there is a "general consensus" among members that mergers will be critical to the trade group's survival.

The U.S. League, with 1,968 thrift members, is the larger of the two competing thrift associations in Washington. The council - formerly the National Council of Savings Institutions - has 350 members.

A merger of the two groups, which their respective officers have discussed off and on in recent years, and a further combination with the IBAA could "inject fresh blood to the membership and improve the economic viability of the League," said the BDO Seidman report.

The study was prepared by Anat Bird, national director of financial institutions consulting at BDO Seidman, and cost about $50,000.

Warning About Infighting

It warned the U.S. League that "extensive" internal politics could lead to its "demise." It also concluded that the larger and more powerful S&Ls in the group have a "disproportionate say" in the way the organization is run.

According to the study, 84% of 800 thrift executives surveyed are either "very" supportive or "generally" supportive of a merger with another trade group.

Frederick L. Webber, president of the U.S. League, said the trade group and the IBAA are not in merger negotiations.

But he said that in the past six months the groups have formed an "informational liaison team" to discuss banking and thrift issues.

"For now the focus is clearly on the [National] Council," he said. "I think you have to take it a step at a time."

Thrifts Drawn to IBAA

Kenneth A. Guenther, executive vice president of the IBAA, said the subject of merging with the league has come up at board meetings, and more thrifts are joining the banking association.

"It is something that is discussed, but I think it is an issue that remains on a back burner," he said.

Numerous Flaws Listed

The U.S. League study listed numerous flaws that need correcting. Among them:

* Internal politics are extensive and counterproductive.

* The league is extremely political. As a result, distrust exists among staff, and teamwork is lacking.

* The league has an image and credibility problem in Washington.

* Larger members have the power to subvert the governance and decision-making process.

* There is a lack of clear goals; no strategic plan for resource allocation is in place.

Mr. Webber said the political infighting identified in the study has since "died down considerably."

"We have worked hard at getting that under control," he said.

Some Drag Their Feet

The study also said some staff members have been slow to respond to the changing environment in the thrift industry.

"As we continue to shrink, those who don't have a progressive view of things will either take themselves out voluntarily, or be taken out," Mr. Webber said.

He added that of perhaps 60 recommendations in the study, the league has met 45 of them. He said elected board members are being urged to spend more time out with the membership.

Rebuilding Relationships

The league is rebuilding its relationships with state thrift groups.

And the league is spending more time on Capitol Hill lobbying for issues like easing the qualified thrift lender test, which now requires thrifts to keep 70% of their assets in housing-related investments.

Mr. Webber commissioned the study about a year ago to gain an impartial assessment.

"We got the unvarnished issue," he said. "We wanted a third party to help us chart a course for the future," he said.

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